Project Management 101

Project Management 101: scope schedule cost venn diagram-01_0.pngThe Project Manager

A project is an effort that has a beginning and an end, defined tasks (scope), and an estimated cost for a good or service. Any deviation to scope, schedule, or cost could cause the project to go off the rails costing more and resulting in a late delivery.

The ring leader that is responsible for keeping the train on the tracks from beginning to end is called the Project Manager (PM). The PM has a very difficult job as he/she must be a jack of all trades, wearing many different hats. The size and nature of the project will dictate the required number of hats.

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The Project Lifecycle

The project lifecycle starts with a customer. Not all opportunities are found by business development as every so often the PM is generating new business (new and follow-on) since he/she owns the relationship with the customer. In a perfect world the PM and the Proposal Manager would be one in the same but that rarely happens. It’s important that the hand-off between proposal to project initiation be handled smoothly; if not, the project is off to an unknown start.

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The initiation phase establishes the basic platform for a successful project. To be an executable project, the ERP captures from the proposal the business requirements, the high-level budget, a set of tasks and a preliminary resource plan. Considering the size and complexity of the project, the project manager develops a project team to help manage the project.

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The planning phase is when the project is detailed into consumable pieces of work. The scope is reflected in the WBS of the project. Resources, skill mixes, time-frames, and rates are planned to the lowest level of the WBS. The length and complexity of the project will dictate how far in the future it is practical to plan. For some projects you may want to detail plan the entire project, and in others you may want to plan out for 6 months and leave the remaining work in high-level planning packages. A realistic plan that all stakeholders agree on is the goal.

The execution phase is when the rubber meets the road. It is now time to implement the plans that have just been created. The project team is responsible for making sure they are executing to plan. We are not naive and do understand that not everything will go perfectly no matter how much prep work is done. Risks and issues will arise and the team will have to manage through them. How well the PM and their team handle those issues and resultant changes is a huge factor in the overall success of the project. The customer may not like it if things change but they will appreciate being kept informed and being in the loop on solutions and mitigations. During this phase of the project it is necessary that all stakeholders have visibility into their piece of the project. Real-time reports and dashboards will help keep role appropriate information flowing to ensure great business decisions.

The project closeout is also very important. Getting out the final bills, shutting down charge numbers, and archiving information is important. The execution of the closeout affects cashflow, profit, and past performance. This step is often overlooked. So, make sure it is done well with a defined process.

No matter what size or how complex the project is it will follow this lifecycle. By successfully following the lifecycle cadence your team will have the information it needs at the time it is needed. The lines of communication are open, a business cadence established, and the team will have bought off on the plans and are committed to success.

The Project Lifecycle is All About People, Processes, and Tools

To have a successful project management practice, you must have integration of people, processes, and tools. If these three forces are working together in lock-step your project management maturity will continue to increase and so will your track record of successful projects.

People—It is often said, “People are our MOST important asset.” Yet when budget cuts arise we see cuts in training, vacation, perks etc. People are expected to do more with less today so arm them with training, tools, and healthy culture. Training to understand the project management discipline is necessary because it is a learned skill. The more the project managers understand their role the less the likelihood is that there will be issues with projects from a cost and schedule perspective. Project outcomes are significantly better in organizations that invest in ongoing project management training, provide a career path, and establish formal processes to develop project manager competencies, when compared with organizations that invest in none of these.

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People are social creatures and projects are social also. There is much communication and collaboration that must go on for a project to be successful. Keep this in the back of your mind…People create the policies and procedures to be followed and people operate the tools that are tracking the overall project status. We would say that people are your most important asset for sure. 
Processes—A policy is a guiding principle used to set direction in an organization. A procedure is a series of steps to be followed as a consistent and repetitive approach to accomplish an end result. The documentation of the process is a policy. Having a set of policies and procedures that can be used throughout the organization will help the performance of the project teams.

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When creating or updating policies and procedures consider the following:

  • Policies and procedures should guide and establish best practices for your organization
  • Ensure that the policies and procedures will help the teams be successful
  • Make sure that they are tailorable to all projects in your portfolio
  • Provide standardization across the enterprise
  • Make sure there is a repository where all stakeholders can access the current documents
  • Feedback loop to make sure policies are being followed
  • Self-Audit Plan and Corrective Actions

Tools—Selecting the right tool for your project based business is a critical decision. Generic ERP systems just won’t cut it if projects are the center of your world. Selecting the wrong tool can be very costly to implement and, worse, costly to maintain. A tool will not necessarily solve your problems as tools are enablers. It still takes people and processes to make the tools run and keep discipline so that the data is correct and reliable for decision making. You will have more success if you pick a tool that is truly integrated. A good way to test this is to ask to see the integration during a demo. Make sure it is not the promise of integration but a real test of how and when the data moves between systems or modules.

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When picking and implementing a tool make sure you can answer these questions:

  • Is the system you are considering truly project based?
  • What is the architecture of the software? Is it web-based? One database? Multiple tools? Cloud ready?
  • Is the company you are buying from customer centric?
  • Will the system require customizations?
  • Will the system meet the needs of the teams?
  • Will the teams save money and time from the proper use of the system?
  • What is the reputation of the software company you are dealing with? 
  • What is the TRUE total cost of ownership (TCO)?


Creating and maintaining a project schedule is a basic need. There is a high-level schedule for every size project—at a minimum a start and stop date. A project schedule has all tasks time phased throughout the life of the project. If you are utilizing subcontractors, they should also be a part of your master schedule.

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Your schedule should correlate to the project WBS, and include every SOW reference so that all scope is included. The schedule is the performance indicator to all project stakeholders, so make sure that the status is current via a defined cadence (daily, weekly, monthly depending on the needs of the project) and that it is updated for changes to the project. Having an updated and accurate schedule is a great way to communicate to the internal team and it will delight your customer to know what is happening with their project.

Budgeting & Forecasting

Budgeting is what the organization believes is achievable. There should be an action plan in place to achieve the budget. The budget is a target which the organization sets for itself, and becomes management’s commitment to action.

Forecasting is the activity of predicting what will happen in the future. A forecast can be compartmentalized as short, medium, and long-term. It is based on the best assumptions known at the time of development. These assumptions will change over time and the forecast will need to be updated to reflect the changes.

Every project should have a performance management baseline (PMB) that becomes the basis for variance analysis to plan (Budget–Actuals). The budget is the commitment of the team. The budget is a living and breathing document and should be adjusted as scope changes. If the budget is out-of-date it will not provide the metrics needed to analyze variances.

The characteristics of an adequate budget are:

  • All scope is included—Budgeting tools have user-defined-fields (UDFs) so you can track the SOW or IMP references, ensuring you have all the scope budgeted. Scope comprehension is a big challenge. 
  • Correlated directly to the WBS which serves as a foundational structure for reporting on 
  • the project. 
  • Correlated directly to the schedule. The schedule also has a PMB and the schedule and the budget should correlate as far as time periods and resources.
  • Time phased through the life of the project. The best practice would have the budget broken out at a minimum by month but could be done by week. The units (month or week) needed are driven by the nature of the business. 
  • The baseline assumptions are current, and changes are included as required. You want this to be a current representation of the work you are to accomplish.

Forecasting is done at intervals in accordance with your policies and procedures. Most times forecasting is done monthly on an as needed basis and more stringent forecasting like bottom up or grass roots done every quarter or twice a year. Keeping an accurate forecast for both schedule and cost is a project management basic activity.

Why is forecasting so hard to do? There are so many moving parts making it hard to get arms around all the components of a forecast at one time. Below are the major players just for ONE project forecast and there may be 100’s or even 1,000’s of projects in the portfolio.

  • Customer 
  • Project Manager
  • Subcontractors
  • Functional Managers
  • Financial Analysts
  • PMO Resource Manager
  • Business Development
  • Contracts Manager
  • Sales
  • Human Resources

Since forecasting is so important, teams need to have refresher training on basic concepts, tools training, and role-based policy and procedure training. Completion of a budget process and a definition of minor and bottom up forecasts ensure a process perspective. Since the budget is time phased the forecast must be also. Let’s not forget tools. The forecasting tools need the ability to apply rates, do what-ifs, get real-time reports, and have dashboards that provide role appropriate information for good decision making.

Earned Value Management

Earned Value Management (EVM) is a project management best practice that flows directly with your established PM policies. The basics of EVM are plan, execute, assess performance, and monitor the project. EVM is simply a set of tasks that the PM would have to perform in the normal course of business and EVM just puts structure around the process. We discussed scope, schedule, and cost earlier in this chapter and everything the project manager does relates to these. EVM simply integrates the Big 3. The idea behind EVM is to provide an objective measure of performance from both a cost and schedule perspective, and not just a comparison of cost vs. what you expected to spend that month.

Establishing a baseline (cost and schedule) gives the PM the basis to measure performance. As work is completed, both progress and the cost for each task is earned. Simply said you are measuring the work performed on the task against the budget and the schedule. You can quickly see what was spent against the amount of work that was completed.

Companies utilize EVM often because it is a requirement from their customer, however there are benefits to implementing yourself:

  • Proactive vs. reactive 
  • More accurate forecast (cost and schedule)
  • Objectively report work progress against tasks
  • See and explain variances to plan
  • Management of scope and scope comprehension
  • Competitive differentiator

Download our ebook for a handy list of EVM metrics!

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